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Profile of Candidate Barack Obama's Housing Foreclosure Plan

Plan to Address Housing Crisis


Houses for sale on block in Detroit (2/08)

Houses for sale on block in Detroit (2/08)

Photo by Bill Pugliano / Getty Images
Updated April 14, 2008


Obama’s proposals are not as aggressive, expansive or disruptive as Clinton’s proposals. Therefore, they are not as criticized by economists.

Main proposals:

  • Create a $10 billion foreclosure-prevention fund (part of a $30 billion stimulus package) to help at-risk homeowners in cities hardest hit by foreclosures. This would be paid for through penalties under the Stop Fraud Act and/or bonds.
  • Stop Fraud Act aimed at mortgage fraud.
  • Create 10% mortgage-interest credit for homeowners who don’t itemize their income-tax deductions. This would impact as many as 10 million, lower-income homeowners by giving them approximately $500 in additional tax savings a year.
  • Create rating systems for mortgage products and credit cards. The rating system would provide transparency to consumers regarding hidden costs, obligations, terms and interest rates.
  • Frank-Dodd legislation


Obama introduced the Stop Fraud Act a year ago but did not have much of a plan addressing the housing crisis until recently. While his plan has evolved over time, it is not well defined. For instance, he is not specific about how his $10 billion foreclosure-relief fund will be used. Critics argue it is a drop in the bucket anyway. Generally speaking, his proposals are aimed at creating a strong middle-class through tax credits and cuts, as well as creating more transparency in both the mortgage and credit-card industries.

Other aspects of plan as outlined on Obama's website and in speeches:

  • Amend bankruptcy code so that a court can modify an individual’s mortgage payments and to create a medical-debt exemption
  • Establish a Credit Card Bill of Rights that would prevent credit card companies from unilaterally making changes or increasing interest rates on current debt.
  • Establish exemptions from some taxes and fees when a family is facing foreclosure
  • Give a middle-class tax cut


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